Tomato Jos
- Part 2 -

Anand Laishram *

Last week we learnt about a unique problem affecting the Nigerian agriculture sector- Nigeria is one of the largest producers of tomatoes in the world but also happens to be one of the largest importers of tomato paste. Nigerians consume a lot of tomato paste but they aren’t able to profitably produce tomato paste, for their consumption, domestically.

Most of the tomatoes produced in Nigeria go to waste. Adding to this problem, Nigeria’s tomato yield is too low to profitably support tomato paste processing plants. In the end, despite being a major producer of the most important ingredient, Nigeria has to import tomato paste from other countries to meet its own consumption demand.

In order to tackle this issue, Mira Mehta, an entrepreneur who was earlier working at the Clinton Health Access Initiative, and an HBS alumna, co-founded Tomato Jos.

Tomato Jos deployed a systematic, multi-year strategy to address this production gap:
1) Increasing the productivity of tomato farming.
2) Starting an economically viable tomato paste processing plant.
3) Launching a proprietary packaged tomato paste product.

Let’s study their approach in greater detail.

1) Increasing the productivity of tomato farming

Tomato Jos operates its own commercial farm, which is one of the largest active tomato farms in the entire country. It also has a smaller model farm where farmers are trained. Farmers join the company’s Model Farm Program, and they are taught best practices on increasing their productivity, through a mixture of classroom and field-based training.

The program aims at optimizing about 100 specific farming behaviors. For most farmers, joining this program is their first exposure to formal education. Farmers are given a small plot of land on the farm. They cultivate tomatoes, along with other crops like maize, soya, wheat etc. The cultivation goes on year-round.

The farmers are taught:
1st Year
- Contract farming
- The value of working in groups
- Basic concepts in Planting, Fertilization and Integrated Pest Management

2nd Year
- Intermediate concepts in Planting, Fertilization and Integrated Pest Management
- Basic concepts in Irrigation, Labour Management and Record Keeping

3rd Year
- Advanced concepts in Planting, Fertilization and Integrated Pest Management
- Intermediate concepts in Irrigation, Labour Management and Record Keeping
- Basic concepts in Ground Preparation and Unit Economics

Farmers who graduate from the program lease bigger plots of land on the company farm or farm on their own land. Farmers pay for the training and other inputs provided by the company (such as better-quality seeds), with their tomato and other crops. The excess crops are bought by the company from the farmers, at the right prices.

The company has partnered with about 350 farmers till date. 7 billion tomatoes have been produced so far. More importantly the yield has reached an average of 39 tons per hectare (the maximum yield reached being 71 tons per hectare), which is more than the national average of 5 tons per hectare. Tomato Jos has also been able to help farmers increase their incomes up to 15 times.

2) Starting an economically viable tomato paste processing plant

Mira and her team spent the initial years just focusing on increasing the productivity of tomato farming. This is very important because, in order to run a tomato paste processing plant profitably, it is necessary to ensure a steady and consistent supply of tomatoes of good quality, at the right costs.

A tomato processing plant cannot afford to drop below 80% capacity utilization. Otherwise, the cost per-ton-of-production will go up to the point that profit cannot be realized from the finished products. Moreover, all the processing has to take place within a 90-day window from the time of the harvest.

A constant supply of raw materials needs to be fed into the plant every hour, in order to spread out the huge energy costs over as high a production volume as possible. Only then can the plant achieve desirable per-unit costs and be able to sell the products profitably in the market.

After spending the first 5-6 years developing a system for reliably increasing the yield, Tomato Jos broke ground for its first processing plant (worth $5 million) in 2020. However, the COVID pandemic struck and further work progressed very slowly, but eventually, the plant had its first production run in March 2021.

It is the only plant in Nigeria that can produce tomato paste from fresh tomatoes. It utilizes cutting edge equipment from Italy and has about 1000 square meters of indoor production space. The cold storage can store up to 1200 barrels of tomato paste concentrate at -10 degrees Celsius.

3) Launching a proprietary packaged tomato paste product

In 2022, Tomato Jos launched its own tomato paste, which is Nigeria’s first locally owned and produced brand. It comes in 65-gram sachets. The older generations of customers in Nigeria are used to the established, foreign brands and changing their buying behavior and preferences will be quite difficult.

Therefore, Tomato Jos is targeting young, up-and-coming professionals instead. Its marketing is focused on attributes such as higher quality & locally produced tomatoes as ingredients.

CONCLUSION

Tomato Jos’ journey so far has been filled with ups and downs. Its country of operation, Nigeria is one of the most difficult places to do business in the world. Corruption, lack of proper infrastructure and law & order problems (Tomato Jos needs to hire 24-hour security) have made things challenging for the company.

Also, it is quite rare for a woman to lead a company in Nigeria and Mira Mehta has faced numerous obstacles because of this as well. But the company has been making progress and steadily achieving its milestones, against all odds. Its story has a lot of important lessons for agriculture entrepreneurs in the developing world, who want to help their respective regions achieve self-sufficiency in food.